Stock Market Wrapup June 4th
By the BullMarket.com Staff
The Dow, Nasdaq, and S&P 500 all started the week up despite some concerns that China and the factory orders report would drive U.S. stocks down. New highs again marked the close of both the Dow and S&P 500, and all three indices are on track to post their best quarter in at least three years. Stocks in Shanghai took another tumble as the government continues to try and control the stock market. The Shanghai Composite Index dropped -8.3% overnight, but the effect seemed minimal as most other Asian markets closed up, including five record highs. Factory orders grew in April, but the gains were weaker than expected. New orders increased by only 0.3%, which was the smallest gain in three months. Analysts had expected gains of up to 0.8%. While the overall gains were weak, analysts were encouraged by the 2.1% growth for non-defense capital goods excluding aircraft. This sub-metric is considered a good read on business investment.
M&A news once again dominated the headlines. Palm Inc. (Nasdaq: PALM ) signed a deal with private equity firm Elevation Partners for the firm to buy 25% of the smartphone manufacturer. As part of the deal, two Palm executives will resign and shareholders will receive a special $9 per share distribution. Analysts have noted that Palm is facing more competition in the smartphone market lately and it will only get worse as Apple's (Nasdaq: AAPL) iPhone prepares to release at the end of the month. Palm is also adding former Apple hardware engineer Jon Rubenstein to its board as executive chairman. Mr. Rubenstein has settled with the SEC in an investigation surrounding his role in Apple's backdating issues. He paid a fine without admitting guilt. Mr. Rubenstein most notably ran the iPod division from 2004-2005.
Private equity fund Lone Star V LP has entered into an agreement to buy Accredited Home Lenders (Nasdaq: LEND) for $15.10 per share, or a total of approximately $400 million in cash. This is a 10% premium over the stock's Friday close of $13.76. Accredited offers loans to high-risk borrowers, more commonly known as subprime mortgages. This industry, of course, recently suffered a well-publicized collapse.
Telecommunications equipment company Avaya (NYSE: AV), meanwhile, is said to be near closing its deal with private equity firms TPG Capital LLP and Silver Lake Partners. While the deal is not finalized and Avaya could still fall to another suitor, the private equity group seems to be in the leading position.
News Corp (NYSE: NWS) Chairman Rupert Murdoch met with the Bancroft family, who own a controlling interest in Dow Jones (NYSE: DJ), publishers of the The Wall Street Journal. The Bancroft family has been reluctant to meet with Mr. Murdoch, who has made overtures of late trying to buy the company. While the family has been reluctant to sell its stake, this meeting may represent a warming towards the purchase.
According to reports, American Express (NYSE: AXP) is planning to sell its private banking unit within the next one to two weeks. The unit could be worth between $1 and $2 billion. While no suitors have been named publicly, analysts believe that a large international bank could be the purchaser.
Struggling Puerto Rican lender Doral (NYSE: DRL), who last month agreed to be bought out by a private equity fund run by Bear Stearns (NYSE: BSC), has received a rival bid. Privately held FBOP Corp. has made an offer of $1.41 per share in order to take an 80% stake in the lender. This is more than twice what Bear Stearns offered in May.
The Dow, Nasdaq, and S&P 500 all started the week up despite some concerns that China and the factory orders report would drive U.S. stocks down. New highs again marked the close of both the Dow and S&P 500, and all three indices are on track to post their best quarter in at least three years. Stocks in Shanghai took another tumble as the government continues to try and control the stock market. The Shanghai Composite Index dropped -8.3% overnight, but the effect seemed minimal as most other Asian markets closed up, including five record highs. Factory orders grew in April, but the gains were weaker than expected. New orders increased by only 0.3%, which was the smallest gain in three months. Analysts had expected gains of up to 0.8%. While the overall gains were weak, analysts were encouraged by the 2.1% growth for non-defense capital goods excluding aircraft. This sub-metric is considered a good read on business investment.
M&A news once again dominated the headlines. Palm Inc. (Nasdaq: PALM ) signed a deal with private equity firm Elevation Partners for the firm to buy 25% of the smartphone manufacturer. As part of the deal, two Palm executives will resign and shareholders will receive a special $9 per share distribution. Analysts have noted that Palm is facing more competition in the smartphone market lately and it will only get worse as Apple's (Nasdaq: AAPL) iPhone prepares to release at the end of the month. Palm is also adding former Apple hardware engineer Jon Rubenstein to its board as executive chairman. Mr. Rubenstein has settled with the SEC in an investigation surrounding his role in Apple's backdating issues. He paid a fine without admitting guilt. Mr. Rubenstein most notably ran the iPod division from 2004-2005.
Private equity fund Lone Star V LP has entered into an agreement to buy Accredited Home Lenders (Nasdaq: LEND) for $15.10 per share, or a total of approximately $400 million in cash. This is a 10% premium over the stock's Friday close of $13.76. Accredited offers loans to high-risk borrowers, more commonly known as subprime mortgages. This industry, of course, recently suffered a well-publicized collapse.
Telecommunications equipment company Avaya (NYSE: AV), meanwhile, is said to be near closing its deal with private equity firms TPG Capital LLP and Silver Lake Partners. While the deal is not finalized and Avaya could still fall to another suitor, the private equity group seems to be in the leading position.
News Corp (NYSE: NWS) Chairman Rupert Murdoch met with the Bancroft family, who own a controlling interest in Dow Jones (NYSE: DJ), publishers of the The Wall Street Journal. The Bancroft family has been reluctant to meet with Mr. Murdoch, who has made overtures of late trying to buy the company. While the family has been reluctant to sell its stake, this meeting may represent a warming towards the purchase.
According to reports, American Express (NYSE: AXP) is planning to sell its private banking unit within the next one to two weeks. The unit could be worth between $1 and $2 billion. While no suitors have been named publicly, analysts believe that a large international bank could be the purchaser.
Struggling Puerto Rican lender Doral (NYSE: DRL), who last month agreed to be bought out by a private equity fund run by Bear Stearns (NYSE: BSC), has received a rival bid. Privately held FBOP Corp. has made an offer of $1.41 per share in order to take an 80% stake in the lender. This is more than twice what Bear Stearns offered in May.
posted by Stock Administrator @ 8:36 PM
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